Chinese court sentences US geologist to 8 years

By Charles Hutzler -
Associated Press -
Monday, July 5, 2010

BEIJING (AP) — An American geologist held and tortured by China’s state security agents was sentenced to eight years in prison Monday for gathering data on the Chinese oil industry in a case that highlights the government’s use of vague secrets laws to restrict business information.

In pronouncing Xue Feng guilty of spying and collecting state secrets, the Beijing No. 1 Intermediate People's Court said his actions “endangered our country’s national security.”

Its verdict said Xue received documents on geological conditions of onshore oil wells and a database that gave the coordinates of more than 30,000 oil and gas wells belonging to China National Petroleum Corporation and listed subsidiary PetroChina Ltd. That information, it said, was sold to IHS Energy, the U.S. consultancy Xue worked for and now known as IHS Inc.

The sentence of eight years is close to the recommended legal limit of 10 for all but extremely serious violations. Though Xue, now 45 and known as a meticulous, driven researcher, showed no emotion when the court announced the verdict, it stunned his lawyer and his sister, his only family member allowed in the courtroom.

“I can’t describe how I feel. It’s definitely unacceptable,” Xue’s wife, Nan Kang, said by telephone, sobbing, from their home in a Houston, Texas, suburb where she lives with their two children.

U.S. Ambassador to China Jon Huntsman attended the hearing to display Washington’s interest in the case. He left without commenting and the U.S. Embassy issued a statement calling for Xue’s immediate release and deportation to the United States.

Xue’s sentence punctuates a case that has dragged on for more than two-and-a-half years and is likely to alarm foreign businesses unsure when normal business activities elsewhere might conflict with China’s vague state security laws.

Chinese officials have wide authority to classify information as state secrets. Draft regulations released by the government in April said business secrets of major state companies qualify as state secrets.

“This is a very harsh sentence,” said John Kamm, an American human rights campaigner whom the State Department turned to for help last year to lobby for Xue’s release. “It’s a huge disappointment and will send very real shivers up the spines of businesses that do business in China.”

Agents from China’s internal security agency detained Xue in November 2007 and tortured him, stubbing lit cigarettes into his arms in the early days of his detention. His case first became public when the Associated Press reported on it last November.

Like IHS, many multinationals have come to rely on people like Xue to run their China operations. Another China-born foreign national, Australian Stern Hu who worked for the global mining firm Rio Tinto, was sentenced in March to 10 years for bribery and infringing trade secrets that dealt with iron ore sales to Chinese companies.

Born in China, Xue earned a doctorate at the University of Chicago and became a U.S. citizen, returning to his native country to work. By all accounts, including witness statements cited in the court verdict, Xue poured his energies into his work for IHS, trying to gather information on China’s oil industry, contacting former schoolmates from his university days in China.

Two of the three other defendants sentenced along with Xue on Monday were schoolmates. Chen Mengjin and Li Dongxu, who worked for research institutes affiliated with PetroChina were each given two-and-a-half-year sentences and fined 50,000 yuan ($7,500). The other defendant, Li Yongbo, a manager at Beijing Licheng Zhongyou Oil Technology Development Co., was sentenced to eight years and fined 200,000 yuan ($30,000). Xue was also fined 200,000 yuan.

Li and Xue arranged the sale of the database — which was originally prepared by a Chinese company for PetroChina’s parent company and contained details on the coordinates and volume of reserves for the 30,000 wells — to IHS for $228,500, the court’s sentencing document said.

A spokesman for IHS, based in Englewood, Colo., declined to comment immediately. In the past, the spokesman, Ed Mattix, has said that Chinese authorities never notified IHS that it was involved in any wrongdoing.

During Xue’s closed-door trial, which ran over three dates last July and in December, the court document said he defended himself, arguing that the information he gathered “is data that the oil sector in countries around the world make public.”

David Rowley, Xue’s thesis adviser at University of Chicago and a geologist, said that the location and seismic and other data of oil wells is commonly available and could not compromise Chinese security since the government controls access.

“What frightens me most about this is that Xue Feng is, in my experience, a straight-up individual who worked hard, who didn’t push limits, or try to pull a fast one by, but was simply honest and entirely well meaning,” Mr. Rowley said in an e-mail. “That’s IHS’s business — acquiring and redistributing data (bases) so he was simply doing his job.”

In rejecting Xue and his lawyer’s arguments that no crime had been committed, the court cited the National Administration for the Protection of State Secrets as saying that the information Xue received on China National Petroleum Corp. was classified as either secret or confidential.

The court document indirectly acknowledged the difficulties Xue and IHS would have collecting data in such a restrictive environment.

“IHS Co. has information exchange agreements with many oil companies, but exchanging information with Chinese oil companies is very difficult. Because China controls energy information relatively strictly, IHS Co.’s information and data on China are not very complete,” the sentencing statement cited one witness as telling the court.